Traditionally, consumers often purchase products by paying the full purchase price of the product at the time of the transaction. However, in some instances consumers may be able to purchase a product via installments. Installments are periodic payments that may be made by the consumer to the merchant that, over time, result in payment to the merchant of at least the full purchase price. Installments may be beneficial for consumers, as they may be able to spread out a large purchase over time and purchase a product they may have otherwise been unable to save for. Installments may also be beneficial for merchants, as they may have purchases that would not have been made otherwise, and installments may provide for regular income even during periods when fewer sales may occur.
However, installments may be difficult for many merchants to manage. Many merchants lack computing systems that are capable of managing installments, initiating installment transactions, and to seek recourse against consumers in the event that an installment payment is missed. As a result, many merchants are often wary and unwilling to participate in installments. Conversely, financial institutions, such as issuing and acquiring banks, are often equipped to charge their consumers on a periodic basis, have sophisticated computing systems that may handle complex payment schemes, and are experienced in seeking recourse against consumers that miss scheduled payments. Thus, financial institutions may be more suited to participate in installment transactions than merchants.
However, the computing systems used by financial institutions are largely unable to accommodate installment transactions. Existing systems at financial institutions are specially configured for traditional payment transactions, where payment is made in full, and are therefore unable to perform regularly scheduled transactions and to differentiate between a traditional, full payment transaction, and an installment transaction. In addition, financial institutions may require that both types of payments be made available to consumers. As such, computing systems must not only be configured to process and establish installments, but must also be capable of differentiating between traditional, full payment transactions and installment transactions, and for processing each transaction accordingly.
Thus, there is a need for a technical solution to enable the initiation, processing, and management of installment transactions. More particularly, there is a need for a technological improvement to provide for the initiation and processing of installment transaction using existing communication methods and protocols that may enable the implementation of installment transaction using legacy financial systems.